PPI DEADLINE AND PLEVIN RULING: RISK OF SANCTIONS FOR FINANCIAL SERVICES ORGANISATIONS THAT FAIL TO USE THE THREE P’S FOR COMMUNICATION, WARNS GMC SOFTWARE

Jul 5, 2017

‘Process, Proactivity and Proof’ key to communications compliance as Plevin piles on the pressure and 29 August 2019 date locked in

With a final deadline of 29 August 2019 for consumers to make Payment Protection Insurance (PPI) claims, and more claims becoming payable due to the Plevin v Paragon Personal Finance case, GMC Software is warning Financial Services providers face fines and sanctions if they do not communicate using the Three P’s: Process, Proactivity and Proof. The two pieces of PPI news from the FCA have created a perfect storm, giving organisations two fresh issues to deal with. Firstly, they are set to be hit by fresh claims from people desperate to meet the deadline. Secondly, with the Plevinruling widening the field of PPI cases that qualify for compensation, organisations will have to go through previous cases where PPI was sold, to see whether they are now due compensation.

Failure to process claims, review cases in a proactive way, and prove they have been compliant will result in sanctions from the Financial Conduct Authority. This will include being able to prove delivery of letters to customers, and evidence of having communicated multiple times with customers, for example.

“These developments will prove a nasty shock to Financial Services organisations. It had looked as if the PPI claims well was drying up – but the final claims deadline, and internal soul-searching required in light of the Plevinprecedent, will fill it once more,” said Tim Dimond-Brown, VP Sales EMEA at GMC Software. “At first glance, this seems overwhelming, but placing a firm focus on Process, Proactivity and Proof will make it possible to ride out the storm. It’s simple – make sure you follow the processes laid out by the FCA, behave in a proactive manner, and be ready to prove you have done so.”

“Making a PPI claim is a complicated process, so customers will be looking for clear, consistent communication from their service provider; with the ability to get hold of the right information, in the right way, at the right time. On the other side of the coin, organisations also need full oversight of any and all communications they have had with PPI customers to gauge whether there is scope for claims under the Plevinruling. Without this, organisations will see nosediving customer service, surging customer churn, and a greatly increased risk of failing to meet regulator demands.”

The FCA has set a 50% commission “tipping point”, at which firms should presume that the failure to disclose commission gave rise to an unfair relationship, with redress calculated as the excess commission over the 50% “tipping point”. The FCA also requires firms to write to previously rejected complainants that are now eligible in light of Plevin, in order to explain the new basis of complaint to them. Consumers with live PPI policies will now be able to complain after the deadline if they have a future claim on their policy rejected for reasons related to its sale. The complaint must be related to the reason the claim was rejected, for example, eligibility, exclusions or limitations.

More than £26 billion has been paid in PPI cases since 2011, and with 45 million policies sold there is still a substantial number of potential claims that could emerge over the next two years. This means it is more important than ever before that data – from customer information to details of previous conversations and disclosures – is readily available for whichever person needs it, from telephone agents to those dealing with letters. This will allow the organisation to bring any claim, whether it qualifies for compensation or not, to a swift conclusion. Complaints must be dealt with in eight weeks or the Financial Ombudsman Service can get involved; making it vital that claims are acknowledged, progressed and given a thorough, watertight response in a timely manner.

“From a consumer perspective, finding out they are entitled to compensation could be like winning the lottery. But the news poses a major headache for the Financial Services industry, with the potential for significant financial and reputational damage to be done,” Dimond-Brown added. “Now is the time to get your own house in order and meet the challenge head-on. The real winners to emerge from this saga will be the ones who realise it is a wake-up call. We live in turbulent political and economic times – every stakeholder within the Financial Services sector must be confident they are laying the groundwork for full compliance and traceability, so they will be able to ride out future storms of a similar nature.”